Nescafe, being a product of a famous brand nestle have been successful in capturing a high market share of instant coffee. The word Nescafe is actually the portmanteau of two words that are “Nestle” and “café”. Max Mergenthaler along with his team members had worked hard for almost seven years to make coffee powder. On April 1, 1930 for the first time in Switzerland, they succeeded. It was launched in the United States with a brand name known as Taster’s Choice Nescafe. However, the brand name was once again changed and was then known as Nescafe Taster Choice.
Nestle is one of those products that is considered to be people and brand oriented rather than being system oriented. Their marketing strategy is designed in a way that gives importance to the needs and lifestyles of their consumers. The product is of high quality they also try to improve their pricing strategy and distribution networks. Along with all these priorities they are able to generate annual profits (Wentzand Newbery, 2010).
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Nestle Nescafe has been able to satisfy its customers by providing them with products of good quality. This is given intense value. Nescafe seeks to have loyal customers for which they renovate and innovate their products. Nestle prefers to have increased flexibility in its business for which it has become decentralized. To gain the satisfaction of its customers it involves itself in improving its activities along with segmenting its market, targeting different group of customers and positioning. The market of coffee is intense around the world. Out of 73% of the instant coffee market nestle has been able to occupy around 72%. This shows the brand loyalty and their marketing strategy that Nescafe adopts around the world (Greff, 2010).
The three vital elements on which the marketing strategy of Nestle is dependent on is shown by the following formulation:
The discussion of how, when and where to compete is considered less important for Nescafe than quality that they produce to satisfy their consumer’s wants. This is a part of their effective marketing strategy.
The company is mainly targeting the class of consumers that are socio-economic. Those people who accept that Nestle provides products that are of good quality are its potential consumers (Student Murat’s Blog, 2003). However, the prices of its products are not very low, and therefore, not everyone can afford it. Following is a strategy that they use to choose the market that they plan to target:
- Quality realization
- Income level
The positioning strategy:
Three steps that are used by Nescafe in their positioning strategy are:
- To identify the correct competitive advantage
- To choose the correct competitive advantage
- To select the correct completive advantage
This is then communicated effectively by the company and then delivered to the selected market position. It is strongly believed by nestle Nescafe that they are unique in their product and its benefits.
Brand Positioning Strategy
- The composition of the product
- The distinguishing position
- Being concerned about the health of its consumers
- Combination of taste with quality
Threats and opportunities were discovered when External environment of Nestle was studied. These are discussed below:
- Growing market for fair trade hot drinks
- Growing demand for premium coffee products
- Nestle has the capability of spreading out the production line. This skill helps it to compensate its weaknesses being compatible with its strengths. An example is when Nestle products are available at comparatively lower prices in the markets to ensure that greater number o consumers purchase them
- Possibilities of growth in some different zones
- Markets in Latin America, Eastern Europe and Asia provide opportunity for Nestle to boost their market share and sales because of the development in population and economic growth. Although these countries are not very rich and developed, but as the economy of these countries boom, the average level of income of its people will also increase.
- The suppliers have greater control over its customers, therefore have a bargaining power
- Intense competition
- Price war